New Home Sales Up in Dec., Down for 2022

New-home sales in the United States increased 2.3% in December, compared to the previous month, according to the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. Although new-home sales were down 16.4% in 2022 compared to 2021, declining mortgage rates and builder incentives helped drive the modest gain in December. The chairman of the National Association of Home Builders (NAHB), Jerry Konter, states that sales are still down more than 25% year-to-year due to higher construction costs and decreasing affordability.

The median price of a new home declined slightly in December, but remained 7.8% higher than the previous year. Elevated inventories are a concerning sign of a soft market, says NAHB’s assistant vice president for forecasting and analysis, Danushka Nanayakkara-Skillington. The December reading of 616,000 units shows the number of homes that would sell if that month’s pace continued for the next 12 months.

The inventory of new single-family homes remained elevated at a 9-months’ supply, which is far from the balanced market level of a 6-months’ supply. The number of homes available for sale increased 18.5% year-to-year, with completed, ready-to-occupy homes accounting for just 15% of total inventory. The median new home sale price in December was $442,100, down 3.7% from November but up 7.8% from the previous year.

On a regional basis, new home sales fell in all four regions, with the biggest drop in the West (23.5%) followed by the Midwest (22.1%) and the South (13.0%). The Northeast experienced the smallest decrease, with sales down 8.2% compared to the previous year.